The main drivers of labour cost dynamics in Central and Eastern European countries

Maria Denisa Vasilescu, Larisa Stănilă, Amalia Cristescu, Maria Berta Belu and Silvana Crivoi
Additional contact information
Maria Denisa Vasilescu: National Scientific Research Institute for Labour and Social Protection, Romania
Larisa Stănilă: National Scientific Research Institute for Labour and Social Protection, Romania
Amalia Cristescu: National Scientific Research Institute for Labour and Social Protection, Romania
Maria Berta Belu: National Scientific Research Institute for Labour and Social Protection, Romania
Silvana Crivoi: National Scientific Research Institute for Labour and Social Protection, Romania

Theoretical and Applied Economics, 2025, vol. XXXII, issue 2(643), Summer, 107-120

Abstract: Labour costs are a fundamental component of production expenses, significantly impacting both the quantity and quality of output. In the current European economic context marked by significant price increases, the paper aimed to empirically investigate the relationship between inflation and labour costs in the short and medium term. We focused on the situation in Romania and three other Central and Eastern European countries: the Czech Republic, Hungary, and Poland. We applied the Granger causality test to determine the direction of causality between the two indicators mentioned. We also performed a regression analysis to gain a more in-depth understanding. The results highlighted the existence of a causal relationship from inflation to labour costs at both aggregate and sectoral levels, with variations across countries and sectors, supporting the hypothesis that inflation precedes increases in labour costs. To explore the determinants of labour costs in more depth, we estimated regression models for three of the analysed countries. The results indicated that past labour cost values, inflation, and labour productivity are the main drivers of labour cost dynamics in Romania, the Czech Republic, and Hungary. Additionally, the share of exports in GDP and the employment rate influence labour costs in Hungary and the Czech Republic, but with distinct country-specific patterns.

Keywords: labour costs; inflation; Granger causality; regression models. (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://store.ectap.ro/articole/1834.pdf (application/pdf)
http://www.ectap.ro/articol.php?id=1834&rid=159 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:agr:journl:v:xxxii:y:2025:i:2(643):p:107-120

Access Statistics for this article

Theoretical and Applied Economics is currently edited by Mircea Dinu

More articles in Theoretical and Applied Economics from Asociatia Generala a Economistilor din Romania / Editura Economica Contact information at EDIRC.
Bibliographic data for series maintained by Mircea Dinu ().